Toronto's main stock index ended lower on Friday as concerns over US bank earnings hit financial stocks and rising global inflation rates hit miners. Toronto-Dominion Bank was down 0.85 percent at C$82.09, Canadian Imperial Bank of Commerce fell 1.4 percent to C$82.50 and National Bank of Canada slid 0.91 percent to C$76.30.
The heavily weighted financial sector slumped 0.62 percent after Bank of America reported a sharp drop in first-quarter profit on Friday due to higher expenses at its mortgage business. That followed J.P. Morgan Chase & Co's results on Wednesday, which showed shrinking outstanding loans for the fourth consecutive quarter, raising questions about future profits in the US banking industry.
"The reaction has been definitely less than stellar, so I think we're just kind of getting dragged down with some of the American results," said Levente Mady, market strategist at Union Securities in Vancouver. The materials sector, home to miners, fell 0.55 percent as mounting inflation pressures in China caused doubts to be cast on the demand outlook for commodities. Higher inflation in Europe also added to the concerns.
Inmet Mining was down 2.33 percent at C$66.62 and Labrador Iron Ore dropped 2.44 percent to C$76.51. "People are worrying a little about commodity prices," said Irwin Michael, a portfolio manager at ABC Funds in Toronto, pointing to a still-surging Chinese economy.
"People are looking beyond this and saying, 'Look, they (China) are probably going to continue increasing rates, what effect is that going to have on the stock market?'" The Toronto Stock Exchange's S&P/TSX composite index ended down 22.68 points, or 0.16 percent, at 13,799.12. Half of the 10 main sectors were lower. For the week, the index dropped 2.88 percent.
"On balance, we think this is a normal short-term correction," said Michael. "We believe the stock market and the economy will saw-tooth their way up and the last week has been one of those saw-teeth on the way down." Iamgold was one of the big decliners on the day, dropping 8.67 percent to C$19.27 after it said it will sell its 18.9 percent interest in the Tarkwa and Damang gold mines in Ghana to Gold Fields for $667 million in cash.
Elsewhere, the Air Canada Pilots Association said it cancelled a vote on a tentative labour agreement with the country's largest airline, after parts of the proposed deal proved "controversial" among pilots. Shares of Air Canada fell 2.89 percent to C$2.35. Energy producers were among the top gainers, as oil prices rose on improving US consumer sentiment. Canadian Natural Resources ended up 2.5 percent at C$43.63, while Canadian Oil Sands rose 3.24 percent to C$32.55.
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